JANEL CORP

Previous wording

The following discussion and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes thereto as of and for the three months ended December 31, 2024, which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Amounts presented in this section are in thousands, except share and per share data.

Current wording

The following discussion and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes thereto as of and for the six months ended March 31, 2025, which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Amounts presented in this section are in thousands, except share and per share data.

Previous wording

This Quarterly Report on Form 10-Q (the “Report”) contains certain statements that are, or may deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and that reflect management’s current expectations with respect to our operations, performance, financial condition, and other developments. These forward – looking statements may generally be identified using the words “may,” “will,” “intends,” “plans,” projects,” “believes,” “should,” “expects,” “predicts,” “anticipates,” “estimates,” and similar expressions or the negative of these terms or other comparable terminology. These statements are necessarily estimates reflecting management’s best judgment based upon current information and involve several risks, uncertainties and assumptions. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and readers are advised that various factors, including, but not limited to, those set forth elsewhere in this Report, could affect our financial performance and could cause our actual results for future periods to differ materially from those anticipated or projected. While it is impossible to identify all such factors, such factors include, but are not limited to, our strategy of expanding our business through acquisitions of other businesses; we may be required to record a significant charge to earnings related to the impairment of acquired assets; we may fail to realize the expected benefits or strategic objectives of any acquisition, or that we spend resources exploring acquisitions that are not consummated; risks associated with litigation, including contingent auto liability and insurance coverage, and indemnification claims and other unforeseen claims and liabilities that may arise from an acquisition; changes in tax rates, laws or regulations and our acquired companies and subsidiaries’ ability to utilize anticipated tax benefits; the impact of rising interest rates on our investments, business and operations; conflicts of interest with the minority shareholders of our business; we may not have sufficient working capital to continue operations; we may lose customers who are not obligated to long-term contracts to transact with us; instability in the financial markets; changes or developments in U.S. laws or policies; competition from companies with greater financial resources and from companies that operate in areas in which we plan to expand; our dependence on technically skilled employees; impacts from climate change, including the increased focus by third-parties on sustainability issues and our ability to comply therewith; competition from parties who sell their businesses to us and from professionals who cease working for us; the level of our insurance coverage, including related to product and other liability risks; our compliance with applicable privacy, security and dat…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Quarterly Report on Form 10-Q (the “Report”) contains certain statements that are, or may deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and that reflect management’s current expectations with respect to our operations, performance, financial condition, and other developments. These forward – looking statements may generally be identified using the words “may,” “will,” “intends,” “plans,” projects,” “believes,” “should,” “expects,” “predicts,” “anticipates,” “estimates,” and similar expressions or the negative of these terms or other comparable terminology. These statements are necessarily estimates reflecting management’s best judgment based upon current information and involve several risks, uncertainties and assumptions. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and readers are advised that various factors, including, but not limited to, those set forth elsewhere in this Report, could affect our financial performance and could cause our actual results for future periods to differ materially from those anticipated or projected. While it is impossible to identify all such factors, such factors include, but are not limited to, our strategy of expanding our business through acquisitions of other businesses; we may be required to record a significant charge to earnings related to the impairment of acquired assets; we may fail to realize the expected benefits or strategic objectives of any acquisition, or that we spend resources exploring acquisitions that are not consummated; risks associated with litigation, including contingent auto liability and insurance coverage, and indemnification claims and other unforeseen claims and liabilities that may arise from an acquisition; changes in tax rates, laws or regulations and our acquired companies and subsidiaries’ ability to utilize anticipated tax benefits; the impact of rising interest rates on our investments, business and operations; conflicts of interest with the minority shareholders of our business; we may not have sufficient working capital to continue operations; we may lose customers who are not obligated to long-term contracts to transact with us; instability in the financial markets; changes or developments in U.S. laws or policies (including the imposition of tariffs and any resulting counter-tariffs as well as reductions in federal government funding, such as budget cuts for the National Institutes of Health and funding reductions for universities); competition from companies with greater financial resources and from companies that operate in areas in which we plan to expand; our dependence on technically skilled employees; impacts from climate change, including the increased focus by third-parties on sustainability issues and our ability to comply therewith; competition from parties who sel…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

The Company’s Life Sciences segment is comprised of several wholly-owned subsidiaries. The Company’s Life Sciences segment manufactures and distributes high-quality monoclonal and polyclonal antibodies, diagnostic reagents and other immunoreagents for biomedical research and provides antibody manufacturing for academic and industry research scientists. Our Life Sciences segment also produces products for other life sciences companies on an original equipment manufacturer (OEM) basis.

Current wording

The Company’s Life Sciences segment is comprised of several wholly-owned subsidiaries. The Company’s Life Sciences segment manufactures and distributes high-quality monoclonal and polyclonal antibodies, diagnostic reagents and other immunoreagents for biomedical research and provides antibody manufacturing for academic and industry research scientists. Our Life Sciences segment also produces products for other life sciences companies on an original equipment manufacturer basis.

Previous wording

Our senior management has reviewed the critical accounting policies and estimates with the Audit Committee of our board of directors. For a description of the Company’s critical accounting policies and estimates, refer to “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our Annual Report on Form 10-K filed with the SEC on December 6, 2024. Critical accounting policies are those that are most important to the portrayal of our financial condition, results of operations and cash flows and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. If actual results were to differ significantly from estimates made, the reported results could be materially affected. There were no significant changes to our critical accounting policies during the three months ended December 31, 2024.

Current wording

Our senior management has reviewed the critical accounting policies and estimates with the Audit Committee of our Board of Directors. For a description of the Company’s critical accounting policies and estimates, refer to “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our Annual Report on Form 10-K filed with the SEC on December 6, 2024. Critical accounting policies are those that are most important to the portrayal of our financial condition, results of operations and cash flows and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. If actual results were to differ significantly from estimates made, the reported results could be materially affected. There were no significant changes to our critical accounting policies during the six months ended March 31, 2025.

Previous wording

While we prepare our financial statements in accordance with U.S. GAAP, we also utilize and present certain financial measures, in particular adjusted operating income, which is not based on or included in U.S. GAAP (we refer to these as “non-GAAP financial measures”).

Current wording

While we prepare our financial statements in accordance with U.S. GAAP, we also utilize and present certain financial measures, in particular adjusted operating income, which are not based on or included in U.S. GAAP (we refer to these as “non-GAAP financial measures”).

Previous wording

Our non-GAAP financial measure of organic growth represents revenues and gross profit excluding those from acquisitions within the preceding 12 months. The organic growth presentation provides useful period-to-period comparison of revenues as it excludes revenues from acquisitions that would not be included in the comparable prior period.

Current wording

Our non-GAAP financial measure of organic growth represents revenues and gross profit excluding those from acquisitions within the preceding 12 months. The organic growth presentation provides useful period-to-period comparison of revenues and gross profit as it excludes revenues and gross profit from acquisitions that would not be included in the comparable prior period.

Previous wording

We believe that organic growth and adjusted operating income provide useful information in understanding and evaluating our operating results in the same manner as management. However, organic growth and adjusted operating income are not financial measures calculated in accordance with U.S. GAAP and should not be considered as a substitute for total revenues, operating income or any other operating performance measures calculated in accordance with U.S. GAAP. Using these non-GAAP financial measures to analyze our business has material limitations because the calculations are based on the subjective determination of management regarding the nature and classification of events and circumstances that users of the financial statements may find significant.

Current wording

We believe that organic growth and adjusted operating income provide useful information in understanding and evaluating our operating results in the same manner as management. However, organic growth and adjusted operating income are not financial measures calculated in accordance with U.S. GAAP and should not be considered as a substitute for total revenues, operating income or any other operating performance measures calculated in accordance with U.S. GAAP. Using these non-GAAP financial measures to analyze our business has material limitations because the calculations are based on a subjective determination by management regarding the nature and classification of events and circumstances that users of the financial statements may find significant.

Previous wording

In addition, although other companies in ourindustries may report measures titled organic growth, adjusted operating income or similar measures, such non-GAAP financial measures may be calculated differently from how we calculate our non-GAAP financial measures, which reduces their overall usefulness as comparative measures. Because of these limitations, you should consider organic growth and adjusted operating income alongside other financial performance measures, including total revenues, operating income and our other financial results presented in accordance with U.S. GAAP.

Current wording

In addition, although other companies in our industries may report measures titled organic growth, adjusted operating income or similar measures, such non-GAAP financial measures may be calculated differently from how we calculate our non-GAAP financial measures, which reduces their overall usefulness as comparative measures. Because of these limitations, you should consider organic growth and adjusted operating income alongside other financial performance measures, including total revenues, operating income and our other financial results presented in accordance with U.S. GAAP.

Previous wording

Results of Operations – Janel Corporation – Three Months Ended December 31, 2024 and 2023

Current wording

Results of Operations – Janel Corporation - Three and Six Months Ended March 31, 2025 and 2024

Previous wording

Results of Operations – Logistics – Three Months Ended December 31, 2024 and 2023

Current wording

Results of Operations – Logistics – Three and Six Months Ended March 31, 2025 and 2024

Previous wording

Income from operations increased by $874 to $2,010 for the three months ended December 31, 2024, as compared to income from operations of $1,136 for the three months ended December 31, 2023. Income from operations increased as a result of improved margins at Airschott. Income from operations as a percentage of gross profit for the three months ended December 31, 2024 was 17.7% compared to 11.4% in the prior year period, largely due to higher revenues.

Current wording

Income from operations increased to $2,332 for the three months ended March 31, 2025, as compared to income from operations of $929 for the three months ended March 31, 2024, an increase of $1,403, or 151.0%. Operating margin as a percentage of gross profit for the three months ended March 31, 2025 was 19.7% compared to 9.5% in the prior year period.

Previous wording

Results of Operations – Life Sciences – Three Months Ended December 31, 2024 and 2023

Current wording

Results of Operations – Life Sciences – Three and Six Months Ended March 31, 2025 and 2024

Previous wording

Results of Operations - Manufacturing – Three Months Ended December 31, 2024 and 2023

Current wording

Results of Operations - Manufacturing – Three and Six Months Ended March 31, 2025 and 2024

Previous wording

Results of Operations – Corporate and Other – Three Months Ended December 31, 2024 and 2023

Current wording

Results of Operations – Corporate and Other – Three and Six Months Ended March 31, 2025 and 2024

Previous wording

Total Corporate expenses, which include amortization of intangible assets, stock-based compensation and merger and acquisition expenses, decreased by $119, or 6.8%, to $1,625 in the three months ended December 31, 2024 as compared to $1,744 for the three months ended December 31, 2023. We incur merger and acquisition deal-related expenses and intangible amortization at the Corporate level rather than at the segment level.

Current wording

Total Corporate expenses, which include amortization of intangible assets, stock-based compensation and merger and acquisition expenses, increased by $323, or 17.6%, to $2,157 for the three months ended March 31, 2025 as compared to $1,834 for the three months ended March 31, 2024. Total Corporate expenses increased by $204, or 5.7%, to$3,782 for the six months ended March 31, 2025 as compared to $3,578 for the six months ended March 31, 2024. Theincrease in total corporate expenses in both periods was primarily due to higher stock-based compensation and higher amortization expense. We incur merger and acquisition deal-related expenses and intangible amortization at the Corporate level rather than at the segment level.

Previous wording

Interest expense for the consolidated company increased $142, or 27.1%, to $666 for the three months ended December 31, 2024 from $524 for the three months ended December 31, 2023. The increase was primarily due to higher interest rates partially offset by lower average debt balances.

Current wording

Interest expense for the consolidated company increased $10, or 1.8%, to $560 for the three months ended March 31, 2025 from $550 for the three months ended March 31, 2024. Interest expense for the consolidated company increased by $152, or 14.2%, to $1,226 for the six months ended March 31, 2025 from $1,074 for the six months ended March 31, 2024. Theincrease in interest expense in both periods was primarily due to higher average debt balances partially offset by lower interest rates.

Previous wording

On a consolidated basis, the Company recorded an income tax expense of $198 for the three months ended December 31, 2024, as compared to an income tax expense of $192 for the three months ended December 31, 2023. The increase in expense was primarily due to an increase in income from operations.

Current wording

On a consolidated basis, the Company recorded an income tax expenseof $415 for the three months ended March 31, 2025, as compared to an income tax benefit of $123 for the three months ended March 31, 2024. On a consolidated basis, the Company recorded an income tax expenseof $613 for the six months ended March 31, 2025, as compared to an income tax expense of $69 for the six months ended March 31, 2024.

Previous wording

Preferred stock dividends include any dividends accrued on the Company’s Series C Cumulative Preferred Stock (the “Series C Preferred Stock”). For the three months ended December 31, 2024 and 2023, preferred stock dividends were $86 and $72, respectively.

Current wording

Preferred stock dividends include any dividends accrued on the Company’s Series C Cumulative Preferred Stock (the “Series C Preferred Stock”). For the three months ended March 31, 2025 and 2024, preferred stock dividends were $108 and $85, respectively. For the six months ended March 31, 2025 and 2024, preferred stock dividends were $194 and $157, respectively.

Previous wording

Non-controlling interest dividends include the dividends accrued and paid to the non-controlling interest of Indco (the “Non-controlling interest dividends”). For the three months ended December 31, 2024, non-controlling interest dividends were $243.

Current wording

Non-controlling interest dividends include the dividends accrued and paid to the non-controlling interest of Indco (the “Non-controlling interest dividends”). For the six months ended March 31, 2025, non-controlling interest dividends were $243.

Previous wording

Net cash provided by operating activities was $1,754 for the three months ended December 31, 2024, versus $3,006 provided by operating activities for the three months ended December 31, 2023. The decrease in cash provided by operations for the three months ended December 31, 2024 compared to the prior year period was primarilydue to a decrease in net income adjusted by non-cash items of $676 and a decrease in net working capital of $576.

Current wording

Net cash provided by operating activities was $7,067 for the six months ended March 31, 2025, versus $4,294 provided by operating activities for the six months ended March 31, 2024. The increase in cash provided by operations for the six months ended March 31, 2025 compared to the prior year period was primarilydue to the changes in operating assets and liabilities.

Previous wording

Net cash used in investing activities totaled $324 for the three months ended December 31, 2024, versus $53 used in investing activities for the three months ended December 31, 2023. The change in net cash used in investing activities was primarily due to purchase price adjustments relating to payments made on liabilities existing prior to the date of acquisition.

Current wording

Net cash used in investing activities totaled $1,713 for the six months ended March 31, 2025, versus $1,638 for the six months ended March 31, 2024. The change in net cash used in investing activities was primarily due to an increase in earnout payments.

Previous wording

Net cash provided by financing activities was $252 for the three months ended December 31, 2024, versus net cash used in financing activities of $3,835 for the three months ended December 31, 2023. Net cash provided by financing activities for the three months ended December 31, 2024 included the conversion and extinguishment of the acquisition loan into the term loan and proceeds from the line of credit, partially offset by repayment of subordinate promissory notes, dividends paid to preferred stockholders, and dividends paid to non-controlling interest.

Current wording

Net cash used in financing activities was $4,081 for the six months ended March 31, 2025, versus $3,086 for the six months ended March 31, 2024. The change in net cash used in financing activities was primarily due to the conversion and extinguishment of the acquisition loan into the term loan, dividends paid to preferred stockholders, and dividends paid to non-controlling interest.